As more consumers receive packages at their doorstep, many don’t ever think about the intricacies of getting that package to the front door and all that goes into it. The behind the scenes science has become more advanced than ever. Within this post, we will take the journey with a product from warehouse to doorstep.
Today’s shopper is looking for a seamless omni-channel experience, and doesn’t care if they find their product in store or online. What shoppers do care about is that they receive products quickly and inexpensively. For brands, making all inventory available to their customers however they shop, is a must in today’s retail ecosystem.
Walmart has been in the news lately for allowing discounts to those customers that buy online and pick up in store (BOPUIS). Walmart has gone through some struggles adjusting their inventory management over the years, but over the past 12 months they have made some major improvements positioning them as best in class. Walmart can ship product to customers who buy online from a warehouse or from a store, or let the customer pick up the product. It shows true confidence in their inventory management system to be able to pass on shipping savings directly to the customer. I won’t be surprised to see other retailers follow this model; but they will need to catch up quickly.
Walmart like other retailers also allows customers visibility into its inventory by displaying product quantities and the locations the product is at, allowing for customers to not only pick up in store, but at the store that’s closest to them.
Although all brands would love to have the reach and magnitude of Walmart, the reality is very few do, and most brands that sell product at Walmart and other retailers are often faced with a different dilemma, "What do I do with my product once it rolls off the production line?"
A Product Is Born!
It all starts here. Once a new product is produced and roles off the production line, it is packaged and sent to one of three primary places. The Brand’s Warehouse, a Distribution Center, or a Fulfillment Center. Here are some of the advantages and disadvantages of each of these options:
The Brand’s Warehouse
Advantages: After a product is produced, some brands choose to ship that product directly to their own warehouse to store the product until it’s ready to be sent to retail locations, directly to a consumer’s home, or another 3rd party. The advantages of this method include increased control over the product, quality management, speed to market, demand and utilization of existing resources (people and facility).
Disadvantages: Depending on the size of your organization, you may not have the proper space or equipment in place to successfully manage your own inventory. Too often brands will hit a point in their growth where doing fulfillment themselves has become much more of a time consuming operation, or find themselves making far too many unnecessary errors.
Advantages: There are many advantages to shipping directly to a distribution center. A distributor has shared equipment, a centralized inventory system, and people who are trained in warehouse management. Once your product arrives at the D.C. it can remain there until it’s ready to be shipped to its final destination.
Disadvantages: Distribution Centers often aren’t the best at breaking large pallets of items down into consolidated orders of items that may be shipped to a specific store location or directly to a consumer's home. Distribution Centers can also be costly, particularly if you are incurring storage fees on slow moving product that remains in inventory for extended periods of time.
3rd Party Fulfillment Center
Advantages: Much like a Distribution Center, a Fulfillment Center passes on all the advantages of being experts within the field. Shared equipment, space, staff, and technology will be a fraction of the cost of setting up a functioning warehouse on your own. Additionally, Fulfillment Centers can offer more integrated omni-channel solutions than your typical D.C., and can operate under tighter, more accelerated timelines. Fulfillment Centers offer the ability to repack and break down larger shipments into smaller ones. E-commerce brands that sell impulse and everyday items tend to like Fulfillment Centers for these reasons.
Disadvantages: Fulfillment Centers are designed for fast moving products, so slower moving products tend to be costlier than just storing your product directly at your brand warehouse or a D.C. Also, with the level of customization and speed that some projects require, Fulfillment Centers can be seen as a costly investment being that it’s a more high-touch operation.
As more and more brands move towards a true omni-channel fulfillment solution, it’s important to remember some of the advantages and disadvantages of utilizing these different types of facilities to house your goods. To learn more about some of the great services CTL Global offers, check out our website here.